Aside from the traditional holiday shopping season, there may be good reasons to bring forward some planned purchases to Jan. 20: Price increases are widely expected to be passed on to U.S. consumers should the new Trump administration follow through on its plans to enforce tariffs across the board on imports.
President-elect Donald Trump has announced that the US will impose a new 25% tariff on imports from Mexico and Canada and another 10% on Chinese imports. During the campaign, Trump also mentioned a 10% tariff on all imports and an additional 60% tariff on imports from China.
Of course, no one knows exactly what the final tariffs will be. And before consumers rush to buy essential and non-essential goods, some are warning that retailers are using the threat of tariffs to boost their year-end sales.
Nevertheless, analysts and economists also warn against the introduction of tariffs. And according to Trump's own promises, certain consumer goods are at particular risk of price increases.
While the impact on consumer prices would be far-reaching, the first thing that comes to mind is cars.
GM, Ford and Stellantis, the big three automakers, rely heavily on plants in Mexico and Canada to produce vehicles for the U.S. market. About 15% of the 15.6 million new vehicles sold in the U.S. last year came from Mexico, while 8% came from Canada, according to Global Data.
In response to Trump's announcement, Mexico's Economy Minister Marcelo Ebrard noted that 88% of U.S. pickups from the three major automakers were imported from Mexico. As a result of the tariffs, the average price of a pickup truck in the U.S. would rise by $3,000, he said
Analysts at Wells Fargo, meanwhile, forecast U.S. prices for vehicles made entirely in Canada and Mexico would rise by $8,000 to $10,000. But U.S.-made cars wouldn't be spared, with the tariffs expected to increase their prices by an average of $2,100.
Electric vehicles (EVs) are also particularly vulnerable, potentially facing a double whammy of tariff-related price increases and the end of the Biden administration's $7,500 federal tax incentive for electric vehicle purchases. The combination of the two could increase the average price of an electric vehicle by at least 20%.
Aside from automotive products, the National Retail Federation (NRF) predicts huge increases in consumer prices for laptops and tablets, major home appliances, video game consoles and smartphones, and e-bikes.
Based on Trump's campaign promise of a 10% tariff on all imports and an additional 60% tariff on imports from China, NRF predicts that the price of an average household appliance would rise by 19.4%.
According to the Consumer Technology Association, price increases for laptops and tablets would be much larger, increasing by at least 45%. Likewise, the price of a new video console would increase by almost 40%. Smartphone prices are expected to rise by at least 26%.
